Starbucks reviews UK tax approach

Starbucks reportedly paid less than nine million pounds in corporation tax in the UK in the last 14 years

Coffee giant Starbucks has said it is looking at its "tax approach" in the UK after coming under fire for paying no corporation tax in the country in the last three years.

The US coffee firm - valued at £25 billion - has generated more than £3 billion of sales in the UK since 1998 but it emerged in October it has paid less than 1% in corporation tax.

Starbucks, which has more than 700 outlets in the UK, said it was "committed to the UK for the long term" and added: "We are looking at our tax approach in the UK. The company has been in discussions with HMRC for some time and is also in talks with the Treasury." The company said it would release further details of its UK tax plans this week.

The group reportedly paid just £8.6 million in corporation tax in the UK in the last 14 years.

Its nearest UK rival, Costa, owned by Whitbread, recorded £377 million sales last year, compared with Starbucks' £398 million, but its tax bill came to £15 million, or 31% of its profits.

Starbucks previously said it paid its "fair share of taxes" in full compliance with UK law and no authority had suggested otherwise.

A four-month investigation by news agency Reuters discovered that Starbucks was able to cut income tax by paying fees to other parts of its global business, such as royalty payments for use of the brand.

This means Starbucks UK is effectively making a loss and therefore does not have to pay any corporation tax. As a result, it has not broken any law. The most recent results, posted for 2011, show Starbucks UK recorded a loss of £33 million.

A Starbucks spokesperson said: "Starbucks is committed to the UK for the long term and we have invested more than £200 million in our UK business over the past 12 years. Starbucks has complied with all the tax laws in this country but has regretfully not been as profitable as we would have liked.

"We have listened to feedback from our customers and employees, and understand that to maintain and further build public trust we need to do more. As part of this we are looking at our tax approach in the UK. The company has been in discussions with HMRC for some time and is also in talks with the Treasury. We will release more details later in the week."